As short-term rentals continue to become increasingly popular, research by Realtor.com has found that an increasing number of young homeowners are open to renting out some, or all, of their home to bring in extra income to save or invest.
As a whole, survey respondents said that 32% of homeowners have experimented with different approaches to earning additional income from their properties, including renting the residence out while they are on vacation. In addition, 85% said they would think about building additions onto their homes to rent out for additional income, while 53% of homeowners said they would rent out some their homes to boost their savings.
The survey also found that while most homeowners use traditional methods, such as getting a roommate, to increase their income, a small percentage are employing creative tactics such as renting out a pool (6%), or renting out their garage or parking space (7%).
"As the next generation of home buyers has embraced ridesharing and short-term rentals, it's a natural next step that they begin to think of their biggest asset—their home—as a potential income stream," said George Ratiu, Manager of Economic Research for Realtor.com. "For people looking to take advantage of the sharing economy, in addition to traditional approaches it may be worthwhile to explore creative solutions, such as listing your home as a vacation rental when you leave town, or renting your outdoor space or pool. Even a small amount of income each month can multiply over a year or more and can turn into bigger returns.”
The survey also found that 69% of homeowners would rent out a portion of their home if it had a separate kitchen or entrance, while 32% had already rented out a space or feature of their property, most commonly by taking on a long-term roommate (10%), or Airbnb (8%).
While nearly half of homeowners (49%) are interested in renting their property, one of the things stopping more homeowners from renting their house is the lack of a suitable tenant that they can trust.
“Homeowners have a higher preference toward renters in their own social network, with 52% saying they would feel comfortable renting to someone they knew,” the study said. “A third of homeowners would feel comfortable trusting someone not in their network, but who could be vetted either directly, or through a third-party app. And having a long-term tenant (six months or more) is more preferable over a short-term (less than a month) renter. Interestingly, 16% of homeowners indicated that they would feel comfortable renting to anyone, if they needed the income. The responses are relatively consistent across generations and locales, with a few nuances. Younger homeowners in urban areas are more comfortable with short-term renters.”
Ratiu continued, “It is important to keep in mind that while today's sharing economy may make it sound easy to make rental income off of your home, there are many factors to consider before taking the leap. You should familiarize yourself with tenant rights in your state and locality, and understand any community restrictions. Along with those, making sure that renters have been properly vetted and that home insurance will cover any potential damage, are additional things to look into before inviting renters into your home.”
Realtor.com gleaned its data from HarrisX, a market research and consulting services company, who surveyed 3,026 respondents over a three-day period in July.
A full copy of Realtor.com’s survey can be found here.